Consumer Inflation Does It Again

The Bureau of Labor Statistics reported on Friday that when stripping out volatile food and energy, the Core Consumer Price Index (CPI) was unchanged in July from June. The Core CPI continues to remain tame and has been moving lower since earlier in the year. The Core CPI rose by 1.7 percent year-over-year and is moving in the opposite direction of where the Fed wants to see inflation. While Core Personal Consumption Expenditures (PCE) is the Fed’s favorite inflation gauge, the Core CPI is a close second. The Fed’s inflation target is 2.0 percent, and both the Core PCE (1.5 percent) and the Core CPI are moving in the opposite direction of that number.

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